annual report - singapore exchange...04 | acma ltd. annual report 2018 chairman’s statement (e)...

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Annual Report 2018

Contents

01 Corporate Information

02 Chairman’s Statement

05 Board of Directors

06 Key Management

07 Corporate Governance Report

22 Financial Contents

126 Statistics of Shareholders

127 Notice of Annual General Meeting

131 Proxy Form

ACMA Ltd. Annual Report 2018 | 01

CORPORATE INFORMATION

Directors

Quek Sim Pin Executive Chairman

Low Seow Chye Independent Director

Robert Low Mui Kiat Independent Director

Tan Keng Lin Independent Director

Victor LevinNon-Executive Director

Audit and Risk Committee

Robert Low Mui Kiat (Chairman) Low Seow ChyeTan Keng Lin

Nominating Committee

Tan Keng Lin (Chairman) Low Seow ChyeRobert Low Mui Kiat

Remuneration Committee

Low Seow Chye (Chairman) Robert Low Mui KiatTan Keng Lin

Employees’ Share Option Scheme Committee

Low Seow Chye (Chairman) Robert Low Mui KiatTan Keng Lin

Share Registrar

Boardroom Corporate & Advisory Services Pte Ltd

Company Secretary

Keloth Raj Kumar

Registered Office

17 Jurong Port Road Singapore 619092Telephone No. : 6268 7733Facsimile No. : 6268 3338 Company Registration No. : 196500233E

Independent Auditors

Mazars LLPPublic Accountants & Chartered AccountantsPartner in-charge: Chen Ningxin, Narissa(From financial year ended 31 December 2018)

Solicitors

Colin Ng & Partners LLP

Principal Bankers

United Overseas Bank Limited Malayan Banking Berhad

02 | ACMA Ltd. Annual Report 2018

CHAIRMAN’S STATEMENT

Dear Shareholders,

On behalf of your directors, I present to you the Annual Report for the financial year ended 31 December 2018.

Revenue

For the financial year ended 2018 (FY2018), revenue increased by S$5.8 million (6.2%) from S$94.2 million in FY2017 to S$100.0 million. Tooling and plastic injection moulding and metal packaging and metal printing services businesses contributed the revenue increases of S$8.4 million and S$1.8 million respectively, offset by S$4.4 million revenue reduction for the Communications, electronics and equipment distribution business.

Costs and Expenses

(a) Raw Materials and Consumables Used (include Changes in Inventories)

For FY2018, raw materials and consumables used and changes in inventories of finished goods and work-in-progress increased by S$4.1 million (7.1%) from S$57.7 million in FY2017 to S$61.8 million which correspond with the revenue increase of S$5.8 million (6.1%) as well as the effect of sales mix.

(b) Employee Benefits Expense

In FY2018, Employee benefits expense comprising of labour and staff costs, increased by S$1.1 million from S$17.6 million in FY2017 to S$18.7 million. The increase was attributed mainly to higher sale commission compensation and salary adjustments made during the year, set-off by a S$0.2 million write-back of bonus over-provision during the year.

(c) Depreciation of Property, Plant and Equipment

For FY2018, depreciation decreased by S$0.2 million (8.1%) from S$2.6 million in FY2017 to S$2.4 million. The decrease was due mainly to an increase in fixed assets being fully depreciated in the current year compared to the prior year.

(d) Other Operating Expenses

For the full year FY2018, Other operating expenses increased by S$3.7 million from S$16.7 million in FY2017 to S$20.4 million. The increase was due mainly to the impairment of S$2.3 million in Other receivables and S$0.8 million in respect of the goodwill relating to one of the Group’s tool manufacturing subsidiaries.As set out in Note 36 of the Financial Statements, the S$2.3 million related to non-trade receivables from third parties which had been outstanding for at least 7 years and were not secured. The S$0.8 million goodwill impairment arose due to the anticipation of lower and delayed future orders intake from uncertain and conservative market sentiments in response to the recent escalated global trade tension.



Loss From Operations

The Group reported an Operating loss of S$3.6 million (FY2017: S$0.7 million loss).

Share of Results of Associates

There were no contributions from the associated companies in FY2018 (FY2017: S$0.03 million loss).

Loss Before Income Tax

The Group incurred a Pre-tax loss of S$3.6 million (FY2017: S$0.8 million loss).

Income Tax Expense

The Group’s income tax amounted to S$0.3 million for FY2018 (FY2017: S$0.3 million). The tax relates to subsidiaries which had taxable profits during the year.

Loss For The Year

The Group recorded After-tax losses of S$3.8 million for FY2018 (FY2017: S$1.0 million loss). After accounting for share of non-controlling interests, loss attributed to the Company amounted for S$3.5 million for FY2018 (FY2017: S$1.4 million loss).

Statement of Financial Position

(a) Property, plant and equipment decreased by S$1.3 million from S$12.8 million at 31 December 2017 to S$11.5 million at 31 December 2018. The decrease was due mainly to S$2.4 million depreciation charged, set-off by the acquisition of fixed assets amounting to S$1.6 million and the effect of foreign currency translation.

(b) Intangible assets reduced by S$0.8 million from S$3.9 million at 31 December 2017 to S$3.1 million at 31 December 2018. The reduction is mainly due to a S$0.8 million provision for impairment of goodwill in respect of one of the Group’s tool manufacturing subsidiaries. The provision arose due to the anticipation of lower and delayed future orders intake from uncertain and conservative market sentiments in response to the recent escalated global trade tension.

(c) Other assets reduced by S$0.2 million from S$1.5 million at 31 December 2017 to S$1.3 million at 31 December 2018 mainly as a result of amortisation charged on a long term prepaid operating lease.

(d) Trade and other receivables increased by S$2.9 million from S$31.0 million at 31 December 2017 to S$33.9 million at 31 December 2018. The increased was due mainly to the increased in the aggregate of trade receivables and accrued revenue of approximately S$2.8 million as a result of higher revenue in FY2018, an increase of S$2.7 million in Prepayments, set-off by a decrease of S$2.6 million in Other receivables.



(e) Cash and bank balances decreased S$1.7 million from S$8.6 million at 31 December 2017 to S$6.9 million at 31 December 2018. Bank borrowings increased by S$2.3 million from S$11.8 million at 31 December 2017 to S$14.1 million at 31 December 2018. Bank borrowings included bank overdrafts of S$3.8 million at 31 December 2018 (31 December 2017: S$4.4 million).

(f) Finance lease payables (current and non-current) decreased by S$0.3 million from S$2.4 million at 31 December 2017 to S$2.1 million at 31 December 2018. The decrease was due to lease repayments of S$0.7 million made during the year, netted off by new finance leases of S$0.4 million secured during 2018.

(g) Trade and other payables (include contract liabilities from contracts with customers) increased by S$0.9 million from S$28.5 million at 31 December 2017 to S$29.4 million at 31 December 2018. The increase was due mainly to higher activity level of the Group for the current year.

Cash Flow and Working Capital

(a) The Group had positive net working capital as at 31 December 2018 of S$13.5 million (31 December 2017: S$16.6 million). The decrease in net working capital was mainly due to the loss incurred in FY2018.

(b) Cash and cash equivalents (net of bank overdrafts) decreased to S$3.1 million at 31 December 2018. Bank overdrafts amounted to S$3.8 million as at 31 December 2018.

Prospects For 2019

The near term outlook is expected to remain challenging and we anticipate having to deal with continuing price pressures from customers, an increasingly competitive landscape as well as rising costs.

The imposition of US tariffs on imports from China and other nations as well as impending BREXIT, have had an adverse impact on the Group’s tooling operations, affecting order intake, the roll-out timeline for prospective projects as well as margins. The Group shall continue to monitor closely the ongoing situation. We are hoping that recent developments will lead to a possible positive resolution of the current US-China trade conflict.

The Group continues to actively explore other business opportunities which may contribute to its earnings base and add shareholder value.

Acknowledgement

I would like to express my sincere thanks to our hardworking staff, our bankers, our customers and our shareholders for their continuing support.

QUEK SIM PINExecutive Chairman27 March 2019


BOARD OF DIRECTORS

Quek Sim PinExecutive Chairman

Mr. Quek graduated with a Bachelor of Business Administration (Honours) Degree from the University of Singapore in 1971 and qualified as an Associate of the Chartered Institute of Insurers (London) in 1975. He founded the Lityan group in 1983 and has been the Executive Chairman of the Company since 1989 after the acquisition of the Lityan group by the Company. He is also on the board of directors of various companies in the Group.

Low Seow ChyeIndependent Director

Mr. Low was appointed as independent, non-executive director on 12 July 1990. He was also appointed as Chairman of the Remuneration Committee and the Employees’ Share Option Scheme Committee. He retired as a practicing accountant in 2015. Mr. Low is a member of the CPA Australia and a Chartered Accountant of Singapore. He is also an ordinary member of the Singapore Institute of Directors.

Victor LevinNon-Executive Director

Mr. Victor Levin was appointed as non-independent, non-executive director on 29 October 2010. He is the Chairman and General Manager of OOO “Melina” Moscow and holds directorship in several companies. He is Executive Chairman of Neurotrend Pte Ltd in Singapore. He is a graduate of the Moscow Petroleum & Gas Industry Institute.

Robert Low Mui KiatIndependent Director

Mr. Robert Low was appointed as independent, non-executive director on 11 December 2009. He was also appointed Chairman of the Audit and Risk Committee. Mr. Robert Low graduated from Curtin University, Perth, Western Australia in accounting and is a Chartered Accountant of the Malaysian Institute of Accountants (MIA). He has more than 30 years of experience working in the Oil & Gas industry, having worked mainly with Exxon Mobil where his last position in 2005 was as Asia Pacific Facilities Manager. Since then, he has been working as a consultant in the Oil & Gas industry.

Tan Keng LinIndependent Director

Mr. Tan was appointed as independent, non-executive director on 23 August 2012. He was also appointed Chairman of the Nominating Committee. Mr. Tan graduated with a Bachelor of Science degree from the University of Singapore. He had been a non-executive Director of Acma Ltd from 1995 to 2006. Over the last 30 years, he has been managing his family’s trading businesses.


KEY MANAGEMENT

Rai RajenChief Operating Officer

Mr. Rai is a fellow of the Association of Chartered Certified Accountants, United Kingdom and a Certified Public Accountant of Singapore. He has been with the Lityan group since 1984 and was the Finance Director of Acma Ltd. from 1989 to 1995. He is also on the board of directors of various companies in the Group.

Chou Kong SengChief Financial Officer

Mr. Chou qualified as a Chartered Accountant in the United Kingdom and was a Certified Public Accountant of Singapore. He has been with the Group since 1994. He is on the board of directors of various companies in the Group. Prior to joining the Group, he was a senior manager with an international public accounting firm in Singapore.

Derek Thu Boon LeongManaging Director, Injection Moulding Operations

Mr. Derek Thu is the Managing Director of our injection moulding operations which has plants in Xiamen. He is also responsible for the tool -making plant at Xiamen. He holds a Diploma in Electronics and Electrical Engineering. He worked for a Japanese multinational company before joining the Group in 1994 as a Quality Manager. He was subsequently promoted to run our plant in Xiamen as the General Manager. Having done well there, he was promoted in 2002 to run all our moulding operations.

Graham WrightManaging Director, International Sales Tool-making Operations

Mr. Wright is in charge of our Marketing Offices in Germany and Spain which brings in the orders for plastic injection moulds for the automotive market in Europe. Mr. Wright holds a degree in Management (BSc Hons) from Manchester University and he has been working in this field for many years with international companies. He joined us in 2000.


CORPORATE GOVERNANCE REPORT

The Board of Directors (the “Board”) of Acma Ltd. (“Acma” or the “Company”) is committed to maintaining a high standard of corporate governance to ensure greater transparency and to protect the interests of the Company’s shareholders (the “Shareholders”).

The Company has put in place various policies and practices that will safeguard the interests of Shareholders and enhance Shareholders’ value as part of its effort to maintain high standards of corporate governance. This report describes the corporate governance practices and procedures adopted by the Company with specific reference to the revised Code of Corporate Governance 2012 (the “Code”) prescribed by the Singapore Exchange Securities Trading Limited (the “SGX-ST”). References to the principles of the Code are listed below. The Company has complied with the principles of the Code where appropriate.

On 6 August 2018, the Monetary Authority of Singapore issued a revised Code of Corporate Governance ("the 2018 Code") and accompanying Practice Guidance. The 2018 Code supercedes and replaces the Code and will apply to Annual Reports covering financial years commencing from 1 January 2019. The Company will review and set out the corporate practices in place to comply with the 2018 Code, where appropriate, in the next Annual Report.

The Board is pleased to report on the compliance of the Company with the Code. Where there are deviations from the Code, appropriate explanations have been provided.

(I) BOARD MATTERS

THE BOARD'S CONDUCT OF AFFAIRS

Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the long-term success of the company. The Board works with Management to achieve this and Management remains accountable to the Board.

As at the date of this report, the Board comprises the following members:

Quek Sim Pin (Executive Chairman)Victor Levin (Non-Executive Director)Low Seow Chye (Independent Director)Robert Low Mui Kiat (Independent Director)Tan Keng Lin (Independent Director)

The Board supervises the management of the business and affairs of the Group. It has established self-regulatory and monitoring mechanisms to ensure that effective corporate governance is practiced.

The Board’s responsibilities include:-• providing entrepreneurial leadership, setting strategic direction and overall corporate policies of the Group

including appropriate focus on value creation, innovation and sustainability;• approval of major funding proposals, investments and divestment proposals, and ensuring that the necessary

resources are in place for the Group to meet its strategic objectives;• establishing and maintaining a sound risk management framework to effectively monitor and manage risks, and

achieving an appropriate balance between risks and company performance;• reviewing and where appropriate, constructively challenging Management's performance;• encouraging an ethical corporate culture and ensuring that the Group's values, standards, policies and practices

are consistent with the culture; and • identifying key stakeholders, balancing the demands of the business with those of the key stakeholders and

ensuring transparency and accountability to key stakeholders.

At least half of the Board is made up of independent directors who have the appropriate core competencies and diversity of experience to enable them to contribute effectively to the Group. All directors are expected, in the course of carrying out their duties under good code of conduct, to act in good faith, provide insights, ensure proper accountability and consider the interest of the Group.



While the Board remains responsible for providing oversight in the preparation and presentation of the financial statements, it has delegated to management the task of ensuring that the financial statements are drawn up and presented in compliance with the relevant provisions of the Singapore Companies Act, Chapter 50 and the Singapore Financial Reporting Standards.

Board committees, namely the Audit and Risk Committee ("AC"), Nominating Committee ("NC"), Remuneration Committee ("RC") and Employees' Share Option Scheme Committee ("EC"), have been constituted to assist the Board in the discharge of specific responsibilities. These committees review or make recommendations to the Board on matters within their specific terms of reference. More information on them is set out below. The Board accepts that while these Committees have the authority to examine particular issues and will report back to the Board with their decisions and recommendations, the ultimate responsibility for the final decision on all matters lies with the entire Board.

Directors are furnished regularly with information from Management about the Group as well as the relevant information relating to the business to be discussed at Board meetings. All directors have separate and independent access to the management team and Company Secretary, all Board and board committees’ minutes and all approval and information papers. In between Board meetings, important matters concerning the Company are also put to the Board for its decision by way of circulating resolutions in writing for the Directors’ approval together with supporting memoranda to enable the Directors to make informed decisions. The Board also has access to independent professional advice, where necessary, at the Company's expense.

Newly appointed directors are given an orientation on the Group’s business strategies and operations, its corporate governance practices as well as information on their duties as a director under Singapore law. A formal letter outlining the duties and responsibilities of the Board will also be issued to each new director upon his initial appointment.

The Board has separate and independent access to the Company Secretary at all times. The Company Secretary attend Board and Committees’ meetings and are responsible for ensuring that Board procedures are followed. The Board also has access to independent professional advice, where necessary, at the Company’s expense.

Directors may also, at the Company’s expense, attend any training course in connection with their duties as directors, if such participation or attendance is required. The directors are informed via electronic mail and briefed during Board meetings of new or revision in laws and regulations as well as changes to financial reporting standards which are relevant to the Group.

Briefings and updates provided for directors in FY2018:-

a) At Board and audit committee meetings, the external auditors and the Company Secretary briefed attendees on developments in financial reporting standards as well as new or revision in laws and regulations.

b) The management updated the Board at each Board meeting on business and strategic developments of the various business segments of the Group.

The Company has adopted internal guidelines setting forth matters that require Board approval. The types of material transactions that require Board approval under such guidelines are listed below:

a) corporate strategy and business plans;b) announcement of quarterly, half year and full year results and annual report;c) declaration of interim dividends and proposal of final dividends;d) convening of shareholders' meeting;e) authorisation of major acquisition and disposal of companies and investments; andf) authorisation of major transactions.

BOARD COMPOSITION AND GUIDANCE

Principle 2: There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management and 10% shareholders. No individual or small group of individuals should be allowed to dominate the Board’s decision making.



The Board currently has five (5) members, comprising one (1) Executive Director and four (4) Non-Executive Directors, three of whom are independent. Information in respect of the directors is set out in the “Board of Directors” section of this Annual Report.

To facilitate effective management, certain functions have been delegated to various Board committees, namely the AC, NC, RC and EC. The Board members and Board Committee members are set out as below:

Table 1:

Name of Director Status Board

Audit and Risk

CommitteeNominating Committee


Employees' Share Option

Scheme Committee

ExecutiveQuek Sim Pin Non-independent ChairmanNon-ExecutiveLow Seow Chye Independent Member Member Member Chairman ChairmanRobert Low Mui Kiat Independent Member Chairman Member Member MemberTan Keng Lin Independent Member Member Chairman Member MemberVictor Levin Non-independent Member

The criterion for independence is based on the definition given in the Code. According to the Code, an independent director is one who has no relationship with the Company, its related corporations, its 10% shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgment with a view to the best interests of the Company.

With the exception of Mr. Victor Levin’s relationship with Neftech Pte Ltd (which is an associated company of the Groupas at 31 December 2018) and Femto Pte Ltd (which was placed in liquidation in FY2018), the non-executive directorshave no relationship with the Company, its related companies or its officers that could interfere, or be reasonably perceived to interfere, with the exercise of the director’s independent business judgement with a view to the best interests of the Company. Mr. Victor Levin is the executive chairman and holds a substantial shareholding interest in Neftech Pte Ltd and Femto Pte Ltd. Mr. Victor Levin is also a substantial shareholder of the Company.

As more than half of the Board is independent, the requirement of the Code that at least half of the Board comprises Independent Directors where the Chairman and the chief executive officer is the same person, is satisfied.

The NC is charged with the responsibility of determining annually whether or not a director is independent. Each independent director is required to complete a confirmation of independence drawn up according to the guidelines stated in the Code. He is required to disclose to the Board any relationships or circumstances which are likely to affect, or could appear to affect, his judgment. Based on the annual review according to the guidelines stated in the Code, the NC is of the view that all independent directors are independent.

When a director has multiple board representations, the NC also considers whether or not the director is able to and has adequately carried out his duties as a director of the Company. The NC is satisfied that sufficient time and attention were given by the directors to the affairs of the Company during FY2018, notwithstanding that they hold directorships in other private companies and have other principal commitments, and will continue to do so in FY2019.

The NC is of the view that the current board size is appropriate, taking into account the nature and scope of the Company’s operations, and the depth and breadth of knowledge, expertise and business experiences of the directors to govern and manage the Group’s affairs.

The NC is satisfied that the Board has the appropriate mix of expertise and experience that as a group provide an appropriate balance and diversity of skills, experience and knowledge of the Company. Each director has been appointed on the strength of his calibre, experience and expertise to contribute to the development of the Company. The NC is satisfied that the Board has substantial independent elements to ensure objective judgment is exercised on corporate affairs independently from Management. No individual or small group of individuals dominates the Board’s decision making.



The Board has no dissenting view on the Chairman’s Statement for the year in review.

The details of board meetings held in FY2018 as well as the attendance of each board member at those meetings and meetings of various board committees are disclosed below:

Name of Director Board

Audit and Risk

CommitteeNominating Committee


Employees' Share Option

Scheme Committee

Number of meetings held 4 4 1 1 (#) -

Executive DirectorQuek Sim Pin 4 - - - -

Non-Independent DirectorVictor Levin 4 4* 1* 1* -

Non-Executive DirectorsLow Seow Chye 4 4 1 1 -Robert Low Mui Kiat 4 4 1 1 -Tan Keng Lin 4 4 1 1 -

* Mr. Victor Levin is not a member of the Audit and Risk, Nominating, and Remuneration Committees, but was invited by the Committees to attend the Committee Meetings.

# The EC did not meet as there were no share options proposed or granted during the year.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the company’s business. No one individual should represent a considerable concentration of power.

Mr. Quek Sim Pin (“Mr. Quek”), the Executive Chairman, currently assumes the roles of both Chairman and Chief Executive Officer (“CEO”) of the Company. As Chairman, Mr. Quek ensures that corporate information is adequately and timely disseminated to all directors to facilitate effective contribution of all directors. He promotes a culture of sound corporate governance as well as of openness and debate both within the Board and between the Board and management. He ensures that adequate time is allocated for discussion of all agenda items, in particular strategic issues, and bears responsibility for the workings of the Board.

As CEO, Mr. Quek bears full executive responsibility for the overall management of the Company’s businesses including charting its corporate and strategic direction.

Taking into account the current corporate structure and the scope of the Company’s operations, the roles of the Chairman and CEO are not separated. All major proposals and transactions are made in consultation with the Board which comprises independent and non-executive directors. The Board is of the view that there are sufficient safeguards and checks in place to ensure that the process of decision making by the Board is independent and based on collective decisions, without any individual or group of individuals exercising any considerable power and influence.

In accordance with Principle 2 the Code, as the Chairman and CEO is the same person, at least half of the Board is made up of independent directors.



BOARD MEMBERSHIP AND NOMINATING COMMITTEE

Principle 4: There should be a formal and transparent process for the appointment and re-appointment of directors to the Board.

Principle 5: There should be a formal annual assessment of the effectiveness of the Board as a whole and its board committees and the contribution by each director to the effectiveness of the Board.

The Nominating Committee’s terms of reference include making recommendations to the Board on all Board appointments. It comprises three non-executive directors, all of whom are independent directors.

The principal functions of the NC are as follows:

• review the size and composition of the Board to ensure that the Board has an appropriate balance of independent directors and ensuring an appropriate balance of expertise, skills, attributes and abilities among the directors;

• recommend to the Board the performance criteria and appraisal process to be used for the evaluation of individual directors as well as the effectiveness of the Board as a whole;

• recommend to the Board the performance criteria and appraisal process to be used for the evaluation of individual directors as well as the effectiveness of the Board as a whole;

• review and assess on an annual basis whether or not a director is independent;

• review succession plans for directors and recommend all nominations for appointments to the Board;

• review and recommend to the Board for the re-nomination/re-election of Directors, having regard to each director’s contribution and performance; and

• review and make recommendations to the Board on training and professional development programmes for Board members.

The NC has established a formal and transparent process for the Company on the appointment of new directors and re-nomination and re-election of directors at regular intervals. In determining the independence each director and evaluating the Board’s performance, the NC considers a number of factors including those set out in the Code.

The NC considers various sources in seeking suitable candidates for new directors, including search companies or recommendations from, among others, Directors, business associates and advisors. The NC evaluates short-listed candidates in areas of academic and professional qualifications, knowledge and experiences in relation to the business of the Group, independence status and other present and past directorships. In the process of evaluation, the NC ensures that the candidates are made aware of their duties and obligations as well as the expectations and the level of commitment required, if elected/appointed as directors. The NC makes recommendations to the Board for approval.

The Board, through the delegation of its authority to the NC, has used its best efforts to ensure that directors appointed to the Board possess the background, experience and knowledge in technology, business, finance and management skills critical to the Group’s businesses and that each director, through his unique contributions, brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made.

New directors are appointed by the Board after the NC has reviewed and recommended their appointment. Such new directors are required to submit themselves for re-election at the next Company’s Annual General Meeting following their appointment.



All directors are required to declare their board representations. The NC has reviewed and is satisfied that the directors of the Company have been adequately carried out his duties as a director of the Company.

As at 31 December 2018, two of the independent directors, Mr. Low Seow Chye and Mr. Robert Low Mui Kiat, has served the Board for more than nine years from their date of their first appointment. In subjecting the independence of both Mr. Low Seow Chye and Mr. Robert Low Mui Kiat to rigorous review, the NC and the Board have (with each of the two directors abstaining from discussions and deliberations about himself) placed more emphasis on whether each of them have demonstrated independent judgment, integrity, professionalism and objectivity in the discharge of his duties. The NC and the Board have noted that both Mr. Low Seow Chye and Mr. Robert Low Mui Kiat has not hesitated to express their own viewpoints as well as seeking clarifications from management on issues they deem necessary. After due consideration, the NC and the Board are of the view that both Mr. Low Seow Chye and Mr. Robert Low Mui Kiat remains independent because they have continued to demonstrate strong independence in character and objective judgment.

Pursuant to Article 93 of the Company’s Constitution, one third of the Board are to retire from office by rotation and be subject to re-election at the Company’s Annual General Meeting.

The NC has recommended the nomination for re-election of Mr. Quek Sim Pin and Mr. Tan Keng Lin who are retiring by rotation pursuant to Article 93 of the Company’s Constitution at the forthcoming Annual General Meeting. The retiring directors have offered themselves for re-election and the Board has accepted the recommendations of the NC.

The NC is satisfied that the Directors retiring at the forthcoming AGM are properly qualified for re-appointment by virtue of their skills, experience and their contribution in terms of guidance and time devoted to Board affairs.

The dates of initial appointment and last re-election of the Directors as well as their directorships in other listed companies are set out below:

Name of Director

Date of Initial Appointment as

Director in Acma LtdDate of Re-election as Director in Acma Ltd

Directorship in Other Listed Companies

Present Last Three Years

Quek Sim Pin 6 December 1989 27 April 2017 - -Victor Levin 29 October 2010 25 April 2018 - -Low Seow Chye 12 July 1990 27 April 2017 - -Robert Low Mui Kiat 11 December 2009 25 April 2018 - -Tan Keng Lin 23 August 2012 28 April 2016 - -

Key information in respect of the directors’ academic and professional qualifications are set out in Page 5 of this Annual Report.

The NC has implemented an appraisal process that requires each director to assess the performance of the Board as a whole annually. It focuses on a set of performance criteria which includes the evaluation of the size and composition of the Board, the Board’s access to information and Board accountability. The performance criteria are not changed from year to year unless circumstances deem it necessary for any of the criteria to be changed. The findings of such evaluations were analysed and discussed with a view to identifying areas for improvement and implementing certain recommendations to further enhance the effectiveness of the Board. In its evaluation, the NC considers the expertise and experience of each Board member, their attendance, participation and contributions to the Board both inside and outside of Board meetings which can be in various forms, including Management’s access to him for guidance or exchange of views outside the formal environment of the Board.

The NC has reviewed the overall performance of the Board in terms of its role and responsibilities and the conduct of its affairs as a whole for the financial year. It is of the view that the performance of the Board as a whole has been satisfactory.



ACCESS TO INFORMATION

Principle 6: In order to fulfil their responsibilities, directors should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities.

Directors are furnished regularly with information from Management about the Group as well as the relevant information relating to the business to be discussed at Board meetings. All directors have separate and independent access to the management team and Company Secretary, all Board and board committees’ minutes and all approval and information papers. In between Board meetings, important matters concerning the Company are also put to the Board for its decision by way of circulating resolutions in writing for the Directors’ approval together with supporting memoranda to enable the Directors to make informed decisions.

Directors are also welcomed to request further explanations, briefings or informal discussions on any aspect of the Company’s operations or business issues from management. The CEO will make the necessary arrangements for the briefings, informal discussions or explanations required.

The Company Secretary attends Board meetings and is responsible for ensuring that proper procedures at such meetings are followed. In the absence of the Company Secretary, a representative from the Key Management will be appointed. Together with the Company’s management, they are responsible for ensuring that the Company complies with the requirements of the Companies Act, SGX-ST Listing Manual and other rules and regulations that are applicable to the Company. The appointment and removal of the Company Secretary would be a matter for the Board as a whole.

Each member of the Board, in the furtherance of their duties, has access to take independent professional advice if necessary, at the Company’s expense.

(II) REMUNERATION MATTERS

REMUNERATION COMMITTEE

Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

Principle 8: The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate (a) directors to provide good stewardship of the company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than necessary for this purpose.

Principle 9: Every company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration in the company’s Annual Report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key management personnel, and performance.

The RC comprises three non-executive directors, all of whom are independent directors.

Its role is to review and advise the Board an appropriate and competitive framework of remuneration for the Board, key management personnel and the Group. In developing remuneration policies, the RC takes into account remuneration, employment conditions and all aspects of remuneration, including termination terms, within the same industry and in comparable companies, as well as the Group’s relative performance and the performance of individual directors and key management staff.

The RC will ensure that remuneration packages for Directors and key management personnel are appropriate and comparable within the industry and to similar-sized companies so as to attract, retain and motivate them.



In setting remuneration packages, the Company consider the employment conditions in the same industry and in comparable companies, evaluated the performance of the Group and the individual employee and reviewed publicly-available information on compensation.

The RC has access to appropriate expert advice in the field of executive compensation outside the Company where required. The RC shall ensure that existing relationships, if any, between the Company and its appointed remuneration consultants (if any) will not affect the independence and objectivity of the remuneration consultants.

Remuneration for key executives is based on corporate and individual performance as well as the overall performance of the Group. In FY2018, there were no executive directors or key management personnel who were contractually entitled to profit-sharing bonuses calculated as a percentage of profit from operations.

The Company does not currently use any contractual provisions to reclaim incentive components of remuneration from executive directors and key management executives in exceptional circumstances of misstatement of financial results, or of misconduct resulting in financial loss to the Company. The RC will consider if required, whether there is a requirement to institute such contractual provisions to reclaim the incentive components of the remuneration of the executive directors and key management personnel paid in prior years in such exceptional circumstances.

The RC’s recommendations are submitted to the Board for endorsement. No director is involved in deciding his own remuneration.

In setting remuneration packages, the RC ensures that directors are adequately but not overly compensated to the extent that their independence may be compromised. Directors’ fees are recommended by the Board to shareholders for approval at the Company’s Annual General Meeting.

The remuneration of the CEO and key management personnel is driven by a pay-for-performance philosophy and is made up two key components: a fixed pay component and a variable bonus component. The variable bonus component is determined based on the Group's and the individual's performance.

The CEO and key management personnel do not presently have any contractual entitlement to profit sharing bonuses calculated as a percentage of profit from operations.

The Executive Chairman/CEO has a service contract which includes terms of termination under appropriate notice. The non-executive directors do not have service contracts with the Company. They are remunerated based on basic fees for serving on the Board and Board Committees as well as fees linked to attendance at meetings for non-executive directors. In addition, directors who are non-controlling shareholders are also entitled to participate in the Company’s share option scheme. Share options are granted to better align the interests of such non-executive directors with the interests of shareholders. Directors’ fees are recommended by the Board to shareholders for approval at the Company’s Annual General Meeting.

Except for their fees and share options, directors are not contractually entitled to any termination, retirement and post-employment benefits. Key management personnel of the Company are also not contractually entitled to any termination, retirement and post-employment benefits.



The level and mixed of each Director’s remuneration for FY2018 are set out below:

Fees & Salary Bonus Other benefits Number of share options granted

% % %

Remuneration Band:S$250,000 to S$499,999Quek Sim Pin 89 7 4 -

Remuneration Band:Below S$250,000Low Seow Chye 100 - - - Robert Low Mui Kiat 100 - - - Tan Keng Lin 100 - - - Victor Levin 100 - - -

The aggregate remuneration payable to directors for FY2018 amounted to S$545,000 including fees of S$136,000.

The Company has disclosed the respective remunerations of the Directors individually (including the CEO) by names and within their respective remuneration bands (below S$250,000 and S$250,000 to S$499,999) as well as the percentage composition in terms of Fees & Salary, Bonus and Other Benefits.

Remuneration of top 4 key management personnel (who are not Directors) for FY2018 are as set out below:

Number of employeesS$250,000 to S$499,999 2Below S$250,000 2

The aggregate remuneration paid to the top 4 key management personnel for FY2018 amounted to S$1,107,000.

The remuneration of the top 4 key management personnel (who are not Directors) is also disclosed within the two remuneration bands (below S$250,000 and S$250,000 to S$499,999) and not on a named basis as recommended by the Code as the Board is of the opinion that full disclosure of such information would not be in the interest of the Company.

No employee of the Company and its subsidiaries was an immediate family member of a Director, CEO or a substantial shareholder of the Company, and whose remuneration exceeded S$100,000 in FY2018.

The Board is of the view that the information on Directors' and key management personnel's remuneration disclosed in the Annual Report would be sufficient for shareholders to have an adequate understanding of the Company's remuneration policies and practice. The Board believes that the disclosure provided is in the best interest of the Company given the highly competitive business environment and allowing Directors and key management personnel to maintain some degree of personal confidentiality on remuneration matters.

Employees’ Share Option Scheme Committee

The EC has been appointed by the Board to administer the Acma Employees' Share Option Scheme 2014.

The Company did not grant any options during the year. Further information relating to the Company's options are set out in the Directors' Statement and Note 24 to the Financial Statements.



(III) ACCOUNTABILITY AND AUDIT

ACCOUNTABILITY

Principle 10: The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.

The Board is responsible for providing a balanced and understandable assessment of the Company’s performance and position, when providing interim and other price sensitive public reports on a quarterly basis, and reports to regulators (if required).

Management is accountable to the Board and presents annual budgets, business plans and quarterly management accounts of the Group to the AC and Board for review. For the interim quarterly unaudited financial statements, the Board provides a negative assurance confirmation to shareholders in line with Rule 705(5).

The Board also take steps to ensure compliance with the law and other regulatory requirements as follows:

a) regular updates on changes on legislative and regulatory requirements including requirements under the listing rules of the SGX-ST;

b) consultations with professional advisors as appropriate;c) seeking feedback from the external auditors on their observations during the conduct of the audit process; and d) ensuring disclosure obligations are fulfilled by obtaining feedback from professional advisors and completion of

the relevant disclosure checklists.

RISK MANAGEMENT AND INTERNAL CONTROLS

Principle 11: The Board is responsible for the governance of risk. The Board should ensure that Management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the company’s assets and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives.

The Board recognises the importance of a sound system of internal controls and risk management practices for good corporate governance. The Board affirms its overall responsibility for the Group’s systems of internal controls and risk management and for reviewing the adequacy and integrity of those systems on an annual basis.

Management regularly reviews the Company’s business and operational activities to identify areas of significant business risks as well as appropriate measures to control and mitigate these risks.

On the matter of governance of risk, the Board has delegated this responsibility to the Audit Committee to oversee the Group's risk management framework and policies, and ensures Management maintains a sound risk management program and internal control measures.

The Group has put in place appropriate risk management policies and processes to evaluate the operating, investment and financial risks of the Group. In evaluating a new investment proposal or business opportunity, several factors will be considered before a decision is being taken. These factors, which are essentially designed to ensure that the rate of returns commensurate with the risk exposure taken, including but not limited to evaluation of the return on investment, the pay-back period, cash-flow generated from the operation, potential for growth and investment climate.

The main areas of financial risk faced by the Group are liquidity risk, credit risk and foreign currency risk. Further details of the financial risks and how the Group manages them are set out in Note 36 and 38 to the Financial Statements.



The Board has received assurances from the CEO and the CFO in respect of FY2018 that:-

(a) the financial records have been properly maintained and the financial statements give a true and fair view of the Group’s operations and finances; and

(b) the Group’s risk management and internal control systems are in place and effective.

The AC and the Board have considered the internal controls established and maintained by the Group, work performed by the external auditors in the course of their statutory audit (to the extent as required by them to form an audit opinion on the statutory financial statements), reviews performed by Management and various Board committees and the assurances received from the CEO and CFO. Based on the aforesaid, the Board, with the concurrence of the AC, is of the opinion that the system of internal controls, including financial, operational, compliance and information technology controls were adequate and effective to meet the Group’s existing business objectives, having addressed the risks which the Group considers relevant and material to its operations. While the Board acknowledge its overall responsibility for the Group’s systems of internal controls and risk management, it should be noted that such systems are designed to manage rather than to eliminate risks and therefore cannot provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors or misstatements, poor judgment in decision-making, human errors, losses, fraud, non-compliance with all relevant legislation or other irregularities.

AUDIT COMMITTEE

Principle 12: The Board should establish an Audit Committee ("AC") with written terms of reference which clearly set out its authority and duties.

The AC comprises three non-executive directors, all of whom are independent directors. No former partner or director of the Company’s existing auditor is a member of the AC.

The Board is of the view that the AC has the requisite financial management expertise and experience to discharge its responsibility properly, with the members bringing with them extensive managerial and financial expertise in their own professional capacities. At least two members, including the AC Chairman, have relevant accounting or related financial management expertise or experience to discharge the AC’s responsibilities.

The AC assists the Board to maintain a high standard of corporate governance, particularly in the areas of effective financial reporting and the adequacy of internal control systems of the Group.

The responsibilities of AC include:

• review the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of the Group and any announcements relating to the Group's financial performance;

• review at least annually the adequacy and effectiveness of the Group's internal controls and risk management systems;

• review the assurance from the CEO and the CFO of the Group on the financial records and financial statements;

• make recommendations to the Board on the proposals to shareholders on (i) the appointment, re-appointment or removal of external auditors; and (ii) the remuneration and terms of engagement of the external auditors;

• review the adequacy, effectiveness, independence, scope and results of the external audit and the company's internal audit function;

• review the policy and arrangements for concerns about possible improprieties in financial reporting or other matters to be raised, independently investigated and appropriately followed up on;



• ensure the Company publicly discloses, and clearly communicates to employees, the existence of its whistle-blowing policy and procedures for raising such concerns;

• review whistle blowing investigations within the Group and ensuring appropriate follow up action, if required;

• review any interested person transactions in respect of Interested Person Transactions falling within the scope of Chapter 9 of the Listing Manual of the SGX-ST;

• review any potential conflicts of interest; and

• undertake such other reviews and projects as may be requested by the Board and report to the Board its findings from time to time on matters arising and which warrant for AC’s attention.

The AC is authorised to investigate any matters within its terms of reference and to have full access to the co-operation of the management and external auditors, Mazars LLP, for it to discharge its duties. It has the full authority and discretion to invite any director or executive officer to attend its meetings.

The AC has met with the external auditors separately without the presence of management for the year under review. In addition, updates on changes in accounting standards and treatment are prepared by the external auditors and circulated to members of the AC periodically for information.

The AC recommends to the Board the appointment, re-appointment and removal of external auditors, and approves the remuneration and terms of engagement of the external auditors.

The aggregate amounts of fees paid or payable to Mazars LLP, the external auditors of the Company, broken down into audit and non-audit services during FY2018 are as follows:

Audit fees S$ 230,000Non-audit fees S$ 11,600Total S$ 241,600

The AC has considered the volume of the non-audit services provided by external auditors, Mazars LLP, to the Group during the financial year, and being satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors, and that Rule 712 and 716 of the SGX-ST Listing Manual have been complied with.

The AC has also considered and confirmed that Mazars LLP is a suitable audit firm to meet the Company’s audit obligations, having regard to the adequacy of resources and experience of the firm. Accordingly the AC recommends to the Board their re-appointment as external auditors of the Company at the forthcoming Annual General Meeting.

The Company has put in place “Whistle-Blowing” arrangements by which staff and third-parties may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The objective is to ensure that arrangements are in place for independent investigation of such matters and for appropriate follow-up action.

Certain subsidiaries and associated companies of the Company were audited by different auditors as disclosed in Notes to the Financial Statements in the Annual Report. However, management has made arrangements for the Company’s auditors to review the audit files of all significant subsidiaries and associated companies, where applicable, and raise any issues of concern and report to the Board and the AC. The Board and AC have considered these arrangements pursuant to Rule 716 of SGX-ST Listing Manual and are satisfied that the appointments would not compromise the standard and effectiveness of the audit of the Group.



INTERNAL AUDIT

Principle 13: The Company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits.

The Board has deliberated and agreed that the size of the current business and operations of the Group does not warrant the Group having an in-house internal audit function or to appoint internal auditors. Currently, the accounting team from the corporate office conduct internal audit on significant companies and report directly to its audit committee if required.

As part of the annual statutory audit of the financial statements, the external auditors also reports to the AC on any material weaknesses in the Group’s internal controls and provide recommendation on other significant matters which have come to their attention during the course of the audit.

The Group reviews annually the requirements in relation to its needs in relation to an internal audit function and will consider outsourcing its internal audit function to a firm of professional accountants at an appropriate time. The hiring, removal, evaluation and compensation of the professional firm to which the internal audit function is to be outsourced, shall be at subject to the approval of the AC. The internal auditors will report directly to the AC and shall have unfettered access to all the Company’s documents, records and personnel.

(IV) COMMUNICATION WITH SHAREHOLDERS

Principle 14: Companies should treat all shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders’ rights, and continually review and update such governance arrangements.

Principle 15: Companies should actively engage their shareholders and put in place an Investor relations policy to promote regular, effective and fair communication with shareholders.

Principle 16: Companies should encourage greater shareholder participation at general meetings of shareholders and allow shareholders the opportunity to communicate their views on various matters affecting the company.

All shareholders are encouraged to attend the Annual General Meeting to ensure a greater level of shareholder participation. To facilitate participation by shareholders, the Constitution of the Company allows the shareholders to attend and vote at general meetings of the Company or by proxies. A shareholder is entitled to appoint not more than two proxies to attend, speak and vote, at general meetings in their absence. The proxy forms must be deposited with the Company not less than forty eight (48) hours before the time set for general meeting.

Voting in absentia via mail, email, fax or other methods is currently not allowed by the Company's Constitution due to the difficulty in authenticating the identity of the shareholders and the integrity of the information transmitted.

Every matter requiring shareholders’ approval is proposed as a separate resolution. Each item of special business included in the notice of meeting is accompanied where appropriate by an explanation for the proposed resolution. As authentication of shareholder identity information and other related security issues still remain a concern, the Company has decided for the time being, not to implement voting in absentia by mail, facsimile or email.

All shareholders of the Company receive the Annual Report (either through online assess at the Company’s website or alternatively by written request for printed copy), circulars and notices of general meetings. The notices are also advertised in newspapers and via announcement on SGXNET. At general meetings, shareholders are given the opportunity to communicate their views and ask Directors and Management questions. The Board and management are present at general meetings to address questions and views expressed by shareholders. The external auditors are also present at the Annual General Meeting to address shareholders’ queries about the conduct of audit and the content of the auditors’ report. All directors attended the last AGM held on 25th April 2018. There were no other general meetings of shareholders since then.



Voting of all of its resolutions in general meetings are conducted by poll and the detailed voting results, including the total number of votes cast for and against each resolution tabled, are announced at the general meeting and via SGX-ST’s website.

The Company Secretary prepares minutes of general meetings which include substantial comments or queries from shareholders and responses from the Board and Management. These minutes are made available to shareholders upon written request. The Company shall be publishing on its corporate website (www.acmaltd.com) minutes of all general meetings of shareholders held from 2019 onwards.

Communication with shareholders forms part of the Group’s corporate governance and commitment to transparent, comprehensive and prompt disclosure. The Company does not practice selective disclosure. Price sensitive information is always released via SGX-ST’s website after trading hours or when there is a trading halt.

The Company uses a number of communication channels to account to shareholders for the performance of the Group and to provide updates on pertinent developments. These include the annual report, quarterly results and other announcements made through the SGXNET, press releases, as well as the Annual General Meeting. The Company strives for timeliness and transparency in its disclosures to the shareholders and the public.

All shareholders are encouraged to attend general meetings to ensure a greater level of shareholder participation. At general meetings, shareholders are given the opportunity to communicate their views and ask Directors and Management question on various matters affecting the Company.

Dividend Policy

The Company has not formally instituted a dividend policy. However pursuant to Rule 704(24) of the Singapore Exchange Listing Rules, in the event that the Board does not declare or recommend a dividend, the Company expressly disclose the reason for the decision together with the announcement of its financial results.

In proposing any dividend payout and/or determining the form, frequency and/or the amount of such dividend payout, the Board will take into account, inter alia, the Group’s financial position, retained earnings, results of operation and cash flow, the Group’s working capital requirements, general economic conditions and other internal or external factors that may have an impact on the business or financial performance of the Group.

The Board has not recommended any dividend for FY2018 as the Group has not been profitable for the year and has accumulated losses.

DEALING IN SECURITIESListing Manual-Rule 1207(19)

The Group has in place an internal code of conduct on dealings in securities based on SGX-ST Listing Manual Rule 1207(19), which prohibits the directors, key executives of the Group and their connected persons from dealing in the Company’s shares during the “black-out” periods commencing two weeks before the announcement of the Group’s financial statements for each of the first three quarters of its financial year and one month before the announcement of the Group’s full year financial statements and ending on the date of the announcement of such results; and when they are in possession of price-sensitive and confidential information, in accordance to the laws of insider trading. They are also discouraged from dealing in the Company’s securities on short-term considerations.

In addition, directors, key executives and their connected persons are required to observe the insider trading under the Securities and Futures Act at all times even when engaging in dealings in securities within the permitted periods. To enable the Company to monitor such transactions, directors of the Company are required to report to the Company Secretary whenever they deal in the Company’s securities.



INTERESTED PERSON TRANSACTIONSListing Manual-Mainboard Rule Chapter 9

To ensure compliance with SGX-ST Listing Manual Rule on interested person transactions, the Board meets quarterly to review if the Company will be entering into any interested person transaction. If the Company is intending to enter into an interested person transaction, the Board will ensure that the Company complies with the rules under Chapter 9 of the SGX-ST Listing Manual.

The AC will also meet quarterly to review whether the Company will be entering into any interested person transaction, and if so, the AC will ensure that the Company complies with the rules under Chapter 9 of the SGX-ST Listing Manual.

When a potential conflict of interest arises, the director concerned does not participate in discussions, make decision and refrain from exercising any influence over the other members of the Board.

The Group does not have a general mandate from shareholders for interested person transactions pursuant to Rule 920 of the Listing Manual of the SGX-ST.

There were no interested person transactions conducted in FY2018 which exceeds S$100,000 in value.

MATERIAL CONTRACTS AND LOANSListing Manual-Rule 1207(8)

Pursuant to Listing Manual Rule 1207(8), the Company confirmed that except as disclosed in the Directors' Statement and Financial Statements of this Annual Report, there were no other material contracts and loans of the Company and its subsidiaries involving the interests of any Director or controlling shareholder of the Company, either still subsisting at the end of FY2018 or if not then subsisting, which were entered into since the end of the previous financial year.

SUSTAINABILITY REPORTING

The Board is mindful of its responsibility to ensure sustainability of the Group's business and have always considered sustainability issues in its formulation of the Group's business strategies. It has identified the material environmental, social and governance factors to the Group and will continue to oversee the management and governance of these factors.

In accordance with Practice Note 7.6 of the Sustainability Reporting Guide issued by the Singapore Exchange Securities Trading Ltd, the next sustainability report of the Group will be made available by 31 May 2019.


Financial Contents

23 Directors’ Statement

27 Independent Auditors’ Report

34 Consolidated Statement of Profit or Loss and other Comprehensive Income

35 Statements of Financial Position

36 Statements of Changes in Equity

38 Consolidated Statement of Cash Flows

40 Notes to the Financial Statements


ACMA LTD. AND ITS SUBSIDIARIES DIRECTORS’ STATEMENT

1

The directors present their statement to the members together with the audited consolidated financial statements of the Group for the financial year ended 31 December 2018 and the statement of financial position and statement of changes in equity of the Company as at 31 December 2018. 1. Opinion of directors

In the opinion of the directors, (a) the consolidated financial statements of the Group and the statement of financial position and

statement of changes in equity of the Company are drawn up so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018, and of the financial performance, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended in accordance with the provisions of the Singapore Companies Act Chapter 50 (the “Act”) and Singapore Financial Reporting Standards (International); and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will

be able to pay its debts as and when they fall due.

2. Directors The directors of the Company in office at the date of this statement are:

Quek Sim Pin Executive Chairman

Low Seow Chye Independent Director Robert Low Mui Kiat Independent Director Tan Keng Lin Independent Director Victor Levin Non-Executive Director

3. Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects were, or one of whose objects was, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, except as disclosed in paragraphs 4 and 5 below.

4. Directors' interests in shares or debentures

The directors of the Company holding office at the end of the financial year had no interest in the share capital and debentures of the Company and related corporations (other than wholly-owned subsidiaries), as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 164 of the Act, except as disclosed below: Name of directors and respective company in which interest are held

Direct interests

Deemed interests Acma Ltd. At 1/1/2018 At 31/12/2018 At 1/1/2018 At 31/12/2018 No. of ordinary shares Quek Sim Pin 5,844,896 5,844,896 1,396,337 1,396,337 Victor Levin 2,682,673 2,682,673 4,554,455 4,554,455 Low Seow Chye 10,000 10,000 – – Robert Low Mui Kiat – – 1,450 1,450

DIRECTORS’ STATEMENT



2

4. Directors' interests in shares or debentures (Continued)

Options to subscribe for ordinary shares At 1/1/2018 At 31/12/2018 Exercise price

Acma Ltd. S$ Low Seow Chye 42,000 – 3.40 Low Seow Chye 80,000 80,000 0.35 Robert Low Mui Kiat 30,000 – 3.40 Robert Low Mui Kiat 80,000 80,000 0.35 Tan Keng Lin 30,000 – 3.40 Tan Keng Lin 80,000 80,000 0.35

There was no change in any of the above mentioned interests between the end of the financial year and 21 January 2019.

5. Share options

On 16 August 2013 (the "Date of Grant"), a batch of share options were granted to management and confirmed employees under the Acma Employees’ Share Option Scheme 2004 (the "Scheme 2004"). Options were granted at the exercise price of S$0.034* per share. The share options expired on 15 August 2018. * During the year 2015, the Company proposed a share consolidation of every hundred (100) existing

issued ordinary shares in the capital of the Company into one (1) Consolidated Share, fractional entitlements to be disregarded save for the event that, upon the completion of the share consolidation, any shareholder who is entitled to less than one (1) Consolidated Share shall be deemed to be entitled to one (1) Consolidated Share. The share consolidation was approved by shareholders at the Extraordinary Meeting held on 29 April 2015. Following the share consolidation, the options were adjusted accordingly.

On 28 November 2016 (the “Date of Grant”), a new tranche of share options were granted to the management and confirmed employees under the Acma Employees’ Share Option Scheme 2014 (the “Scheme 2014”). Options were granted at the exercise price of S$0.35 per share. Both the Scheme 2004 and Scheme 2014 are administered by the Employees’ Share Option Scheme Committee which comprised members of the Remuneration Committee and made up of three Independent Directors. The participants are entitled to exercise the options at any time after the first anniversary of the Date of Grant up to the fifth anniversary of the Date of Grant. In all other cases, an option will be forfeited in the event of whichever is earlier: (i) The option is not exercised within 5 years from the Date of Grant; or (ii) The Participant ceased to be an employee of the Company. However, both the Schemes allow

a participant to exercise an option (at the absolute discretion of the Employees’ Share Option Scheme Committee) where he or she has ceased employment as a result of retirement, ill health, accident or death.

Details of the options to subscribe for ordinary shares of the Company pursuant to the Schemes are as follows:

Date of Grant Expiry date Exercise price At

1/1/2018

Issuance Forfeited At

31/12/2018 S$ Scheme 2004 16.08.2013 15.08.2018 3.40 929,250 – (929,250) – Scheme 2014 28.11.2016 27.11.2021 0.35 1,933,000 – – 1,933,000

2,862,250 – (929,250) 1,933,000




3

5. Share options (Continued) Since the commencement of the Schemes till the end of the financial year: • Save as disclosed above, no options have been granted to the other controlling shareholders

of the Company and their subsidiaries and associates, and no other participant has received 5% or more of the total options available under the Schemes;

• The options granted by the Company do not entitle the option holders, by virtue of such holding,

to any rights to participate in any share issue of any other company in the Group; and • No options have been granted at a discount. There were no unissued shares of the Company or any company in the Group other than those referred to above.

6. Audit and risk committee The audit and risk committee (“AC”) of the Company comprises three members, all of whom are Independent Directors and at the date of this statement are: Robert Low Mui Kiat (Chairman) Tan Keng Lin Low Seow Chye The audit and risk committee has convened four meetings during the year with key management and the external auditors of the Company. The audit and risk committee carried out its functions in accordance with Section 201B (5) of the Act. In performing those functions, the audit committee:

• reviewed the significant financial reporting issues and judgements so as to ensure the integrity

of the financial statements of the Group and any announcements relating to the Group's financial performance;

• reviewed, at least annually, the adequacy and effectiveness of the Group's internal controls and risk management systems;

• reviewed the assurance from the CEO and the CFO of the Group on the financial records and financial statements;

• made recommendations to the Board on the proposals to shareholders on (i) the appointment, re-appointment or removal of external auditors; and (ii) the remuneration and terms of engagement of the external auditors;

• reviewed the adequacy, effectiveness, independence, scope and results of the external audit; • reviewed the policy and arrangements for concerns about possible improprieties in financial

reporting or other matters to be raised, independently investigated and appropriately followed up on;

• ensured that the Company publicly discloses, and clearly communicates to employees, the existence of its whistle-blowing policy and procedures for raising such concerns;

• reviewed whistle blowing investigations within the Group and ensuring appropriate follow up action, if required;

• reviewed any interested person transactions in respect of Interested Person Transactions falling within the scope of Chapter 9 of the Listing Manual of the SGX ST;

• reviewed any potential conflicts of interest; and • undertake such other reviews and projects as may be requested by the Board and report to

the Board its findings from time to time on matters arising and which warrant for AC’s attention.




4

6. Audit and risk committee (Continued)

The audit and risk committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any director and executive officer to attend its meetings. The external auditors have unrestricted access to the audit committee. The audit and risk committee has recommended the nomination of Mazars LLP for re-appointment as external auditors of the Group at the forthcoming Annual General Meeting of the Company.

7. Independent auditors The auditors, Mazars LLP, have expressed their willingness to accept re-appointment.

On behalf of the directors ___________________________ ______________________ Quek Sim Pin Robert Low Mui Kiat Executive Chairman Independent Director Singapore 27 March 2019



INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF ACMA LTD.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ACMA LTD.

5

Report on the Audit of Financial Statements Opinion We have audited the accompanying consolidated financial statements of Acma Ltd. (the “Company”) and its subsidiaries (the “Group”) which comprise the statements of financial position of the Group and of the Company as at 31 December 2018, the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and the statement of changes in equity of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, as set out on pages 34 to 125. In our opinion, the financial statements of the Group and the statements of financial position and changes in equity of the Company are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards (International) (“SFRS(I)s”) so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018 and of the financial performance, changes in equity and cash flows of the Group and the changes in equity of the Company for the financial year ended on that date. Basis of Opinion We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority (“ACRA”) Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (“ACRA code”) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion. Overview Audit Approach We designed a risk-based audit approach in identifying and assessing the risks of material misstatement at both the financial statement and assertion levels. Materiality As in all our audits, we exercised our professional judgement in determining our materiality, which was also affected by our perception of the financial information needs of the users of the financial statements, being the magnitude of misstatement in the financial statements that makes it probable for a reasonably knowledgeable person to change or be influenced in his economic decision. Scope of audit For the audit of the current financial year’s financial statements, we identified 5 significant components which required a full scope audit of their financial information, either because of their size or/and their risk characteristics. Out of the 5 significant components, 3 were audited by component auditors under our instructions and the remaining 2 were audited by us. We determined the component materiality and our level of involvement in their audit necessary for us, in our professional judgement, to obtain sufficient appropriate audit evidence as a basis for our opinion on the Group’s financial statements as a whole.




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Area of focus We focused our resources and effort on areas which were assessed to have higher risks of material misstatements, including areas which involve significant judgments and estimates to be made by directors. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current year. These matters include the salient areas of focus in our audit and do not represent all the risks identified by our audit. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Matter Audit response Impairment of goodwill (refer to Note 3.2 and Note 15 to the financial statements) As at 31 December 2018, the Group recorded goodwill of S$2,912,000, net of impairment loss recognised during the financial year then ended of S$800,000, which represented 16.8% of its total non-current assets.

As disclosed in Note 15, the Group allocated the goodwill to two cash-generating units (“CGU”), being AL&W Limited and Metal Printing and Packaging Ltd, for S$2,643,000 and S$269,000 respectively.

In determining the value-in-use of the applicable CGU to which goodwill is allocated to, management has estimated cash flow projections using key inputs and made assumptions as necessary. The key inputs and assumptions, as discussed in Note 15, include growth rates, pre-tax-discount rate, budgeted gross profit margins and terminal growth rate.

Given the sensitivity of the key inputs and assumptions to various factors, including their outlook of macro-economic environment and future market conditions, significant judgements and estimates have been applied by the management in determining the value-in-use. We hence consider the management’s assessment of impairment of goodwill as a key audit matter.

Our audit procedures included, and were not limited to, the following: • We assessed the management’s identification

of the CGU to which goodwill was allocated;

• We reviewed the cash flow projections approved by the Board of Directors for arithmetic accuracy;

• With the help of our in-house expert, we assessed the reasonableness of the key inputs and assumptions applied by the management in their cash flow projections, in consideration of the historical and expected performance and trend of the CGU, the viability of the management’s plans and the market and industry outlook; and

• We reviewed the appropriateness and sufficiency of the corresponding disclosures made in the financial statements.




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Key Audit Matters (Continued) Matter Audit response Revenue recognition (refer to Note 3.1, Note 4 and Note 40 to the financial statements) The Group has adopted SFRS(I) 15 Revenue from contracts with customers (“SFRS(I) 15”) which is effective for annual periods beginning on or after 1 January 2018, using the retrospective method of adoption in accordance with SFRS(I) 1, with the cumulative effect of initially applying SFRS(I) 15 recognised as an adjustment to the opening balance of retained earnings as of 1 January 2017.

The Group recognised revenue during the financial year ended 31 December 2018 from precision tool making (“tooling”) of S$48,861,000, representing 48.9% of total revenue recognised during the financial year. Consequent to the adoption of SFRS(I) 15, the Group recognised revenue from tooling when the performance obligation is satisfied upon the delivery of the end product per agreed terms and conditions. As discussed in Note 40, the Group recorded adjustments to recognise revenue only when the performance obligation has been satisfied.

As the determination of the appropriate accounting policy requires significant judgement of management and in consideration of the significance of the revenue stream to the Group, we consider management’s assessment and application of SFRS(I) 15 to the tooling revenue stream as a key audit matter.

Our audit procedures included, and were not limited to, the following: • We obtained an understanding of the Group’s

process in assessing and applying SFRS(I) 15 to its revenue stream;

• We assessed the appropriateness of the accounting policy applied by management, in consideration of factors including the Group’s business model and the contracts entered into between the Group and its customers;

• We reviewed the adjustments passed by the Group in their initial adoption of SFRS(I) 15 as disclosed in Note 40; and

• We reviewed the appropriateness and sufficiency of the corresponding disclosures made in the financial statements.




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Key Audit Matters (Continued) Matter Audit response Impairment of trade receivables (refer to Note 3.2, Note 19 and Note 40 to the financial statements) As at 31 December 2018, the Group reported trade receivables with carrying amount of approximately S$19,916,000, net of allowance for expected credit losses (“ECL”) of approximately S$791,000, representing 34.4% of the Group’s current assets.

Consequent to the adoption of SFRS(I) 9, the Group used an allowance matrix to estimate ECL for trade receivables. The ECL rates were based on the Group’s historical loss experience of the customers, for the last 3 years prior to the reporting date for various customer groups that were assessed through an age analysis and by geographical locations, adjusted for forward looking factors specific to the debtors and the economic environment which could affect the ability of the debtors to settle the trade receivables.

As the determination of the ECL requires significant judgement of management and in consideration of the significance of trade receivables in the Group, we consider management’s assessment and application of SFRS(I) 9 to the impairment of trade receivables as a key audit matter.

Our audit procedures included, and were not limited to, the following: • We obtained an understanding of the Group’s

process in assessing and determining the loss rates used in their allowance matrix;

• We reviewed the appropriateness of the bases of the Group for determining the loss rates, with reference to also the historical payment trends of its customers in the past 3 financial years analysed by past due dates and the customers’ geographical locations, adjusted for the Group’s outlook of the macro-economic environment and conditions in which its customers operate in, and consi

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